Prudential FY17 Profit Up, Hikes Dividend; To Demerge M&G Prudential; Stock Up

Prudential to split into two companies to target Asia

Prudential to spin off UK and European business

The move will result in two separately listed companies that will each offer their own distinct investment products - according to a release, M&G Prudential will be an independent savings and investment provider based in London and led by chief executive John Foley, while Prudential Plc will continue as an global insurance group headquartered in London but focusing on growth opportunities across the US, Asia and Africa, under group chief executive Mike Wells.

"There will also have been other insurers in the market with an eye on this".

As well as the demerger, Prudential disclosed the sale of a 12 billion-pound United Kingdom annuities book to Rothesay Life and posted results for 2017, which showed a 6 percent rise in operating profit to 4.7 billion pounds, beating market expectations of 4.6 billion pounds.

"The move represents a welcome expansion of the United Kingdom listed asset management sector which in recent years has lost Henderson, which delisted on the London Stock Exchange following its merger with New York Stock Exchange-listed Janus, and F&C following its acquisition by Canada's BMO, a subsidiary of the Bank of Montreal". We have also achieved all of our 2017 objectives, which we set in December 2013. In Asia, the company reported double-digit broad-based growth in new business profit of 12 percent.

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In the United Kingdom, M&G Prudential's total IFRS operating profit was 10 per cent higher than the prior year.

Earnings per share for FY2017 stood at 93.1 pence, up from 75 pence a year ago.

Total revenue, net of reinsurance, was 86.56 billion pounds, up from 71.84 billion pounds a year ago.

Under the agreement, the group's M&G Prudential arm has reinsured £12 billion of liabilities to Rothesay Life, which is expected to be followed by a Part VII transfer of the portfolio by the end of 2019.

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The transaction will result in a significant increase to Rothesay Life's asset base to over £37bn.

As part of the deal, the life insurer giant will also be offloading its United Kingdom annuity business to Rothesay Life for £12bn, using the proceeds to help fund the demerger.

Full-year ordinary dividend rose 8 per cent to 47 pence per share.

Addy Loudiadis, Chief Executive of Rothesay Life, said: "I am delighted that Prudential, one of the UK's most respected insurance companies, has chosen Rothesay Life to secure its policyholders' pensions over the long term in a landmark transaction for us and for the industry".

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It certainly was for Prudential shareholders today, with the stock up 6.5% to 1,943.5p in late afternoon trading, topping the FTSE 100 leader board.

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